WA Power and Gas Conference
Wednesday, 16 March 2016
Richard Harris, Director, WestGen and Chairman WA Independent Power Association
Future proofing the WA electricity market
Introduction
• Markets and reform
• Networks
• Customer power and new business models
• Renewables and innovation
Benefits of a competitive electricity
market
• Markets better manage risk, capital efficiency and customer needs
• There is no good reason why governments should own generation
• Retail competition keeps pressure on prices and improves services
to customers
• Electricity networks may be better off in private sector
• Government ownership of assets and market entities conflicts with
policy role
• Open and competitive electricity markets are now the norm for
delivering power to consumers and they work
• Well designed, open markets provide the best means to future proof
electricity systems – no matter what new technologies come along
WA electricity market reform Mark2
• Capacity and energy market model preserved
• National market operator – AEMO
• System Management > AEMO
• Market governance/rule change reforms
• National Energy Regulator for networks
• Reserve Capacity Mechanism changes
• Constrained grid access
• Retail competition – FRC?
Still work to be done
• Government ownership vs policy maker
• Industry structure: dominance of Synergy
• Barriers to entry for new market players: retail
• Barriers to entry for new generation, especially
renewables
• Retiring old plant
• Ownership/future direction of networks
Network reform
• Constrained grid access and NER a good start
• Policy issues for transition – grandfathering access and rightsto capacity?
• Challenges of decentralised power models and newtechnologies
• Ownership/direction considerations – natural monopoly orbypass
• Risk and reward
• Owner should want to maximise use and offer new services tomeet the market needs
Customer power and new business models
• It’s a confusing world: customers are now generators
• And they will soon be storage owners
• Customers can switch on and off to suit their power needs
• What is the service offering to a customer?
• What is the new shape of the energy company vehicle – is the “gentailer”
model appropriate for the future?
• Or is it the “Uber” model?
Renewables and innovation
• Renewable Energy Target – not a lot of action, may need
extending beyond 2020
• Small scale/large scale
• Distributed/centralised
• Storage – smoothing intermittency and meeting peak
• DSM – empowering larger customers
• Price is a big driver, but also flexibility – especially with solar
• We’ve had technological innovation, we need financial
innovation
Observations
• Electricity reform in WA has come a long way since the 1990s
• Still a way to go, especially moving from government controlled to market
based solutions
• Market design should encourage investment and innovation – getting there
but need to understand how large projects are financed
• Predicting future technologies is like picking winners, not a good policy, the
key is getting the market design and industry structure right
• IPA has consistently supported competition and private sector investment in
energy assets as the best way of delivering electricity services to customers
Thank You